Supreme Court Grand Bench Rules "HD Hyundai Heavy Industries Subcontractor Union Has No Bargaining Rights with Primary Contractor"

Supreme Court Grand Bench Rules 8-4
"Only the 'real employer' who signs contracts and pays wages
is subject to bargaining"
Subcontractor union loses final lawsuit against HD Hyundai Heavy Industries

The Supreme Court has ruled that primary contractors are not legally obligated to respond to collective bargaining demands from in-house subcontracted workers. The court reaffirmed its previous precedent that, even if the primary contractor exerts influence in the workplace, they are not a legal negotiating party unless there is a direct employment relationship.

The Supreme Court Grand Bench (Presiding Justice Cho Hee-dae, Justice in Charge Oh Kyung-mi) on May 21 upheld the lower court's ruling against the union and dismissed the appeal filed by the in-house subcontractor union in the collective bargaining lawsuit brought by the Korean Metal Workers' Union against HD Hyundai Heavy Industries (the defendant).

This case originated in 2016 when workers employed by in-house subcontractors at HD Hyundai Heavy Industries demanded collective bargaining with the primary contractor to secure guarantees for union activities. The primary contractor refused, stating, "We have no reason to negotiate because we did not hire these workers directly," while the union filed suit, claiming that the contractor, as the principal employer, held substantive authority.

The central issue in the trial was whether a primary contractor, who had only signed a subcontracting agreement and had not entered into a direct employment contract, could be considered an "employer obligated to bargain collectively" under the former Trade Union Act. Of the twelve justices, eight (the majority opinion) ruled in favor of the primary contractor. The bench maintained the 1986 precedent, stating, "In principle, an employer under the Trade Union Act is one who enters into a direct contract with a worker, pays wages, and exercises direction and supervision."

The court explained, "Since unjustified refusal to bargain collectively can result in criminal punishment, the scope of 'employer obligated to bargain collectively' must be interpreted strictly." The bench further stated, "Although the Trade Union Act was recently amended to broaden the concept of employer, it is inappropriate to retroactively apply new legal principles to past cases and overturn established precedents."

Meanwhile, four justices (Lee Heung-gu, Oh Kyung-mi, Shin Sook-hee, Ma Yong-joo) issued a dissenting opinion, arguing that the bargaining rights of subcontractor unions should be protected. They pointed out, "The realities of labor have changed, with increasing outsourcing and indirect employment," and added, "Even if there is no direct employment relationship, if the primary contractor exercises substantive influence over the working conditions of subcontracted workers, responding to collective bargaining is the only way to ensure the effectiveness of workers' constitutional right to unionize."

This content was produced with the assistance of AI translation services.